Can the manager of an SCI make a building available to a partner free of charge? The French Supreme Court has just ruled. If the SCI's articles of association do not explicitly provide for this possibility, the manager cannot take this decision alone. This was confirmed by the Court in a ruling handed down on May 2.
An SCI set up between spouses
In this case, a société civile immobilière had been set up between two spouses. Mrs. owned 99 shares and Mr. one share. The company owned a two-storey building, the first floor of which had been rented since 2002 to a company run by the husband. In 2013, following the couple's separation, the SCI granted the latter a loan for use of the two floors of the building. In 2014, at an extraordinary general meeting organized by a court-appointed representative, it was decided to remove Mr. from his position as manager and appoint Mrs. in his place.
The husband sued the SCI for repayment of his SCI partner's current account. The company filed counterclaims, in particular to cancel the loan agreement entered into in 2013.
On appeal, the ex-wife won the case. According to the Court of Appeal, the fact that the articles of association of a non-trading property company do not include the option of making a building available free of charge to a partner does not allow the manager to take this decision alone.
A decision exceeding the manager's powers
The Cour de cassation confirms the decision of the appeal court, with additional clarifications. It appears that the SCI's corporate purpose did not expressly state that the company's assets could be made available to its partners free of charge. As a result, the judges ruled that the cancellation of the loan-for-use contract with the SCI was legally justified.
Theruling handed down on May 2, 2024 marks an evolution in the court's position towards greater severity in the interpretation of the corporate purpose. Particular care must therefore be taken when defining the scope of the corporate object. Merely mentioning the acquisition, ownership, administration and operation of any real estate or movable assets does not entitle the manager to sell the SCI's assets alone. Indeed, the corporate purpose must describe the activities carried out by the company in sufficient detail. It determines the scope of the manager's powers, as he or she can only act in the interest of and within the limits of the corporate purpose. If he performs acts that are not provided for in the corporate purpose, he will be held liable. To avoid any unpleasant surprises, it is advisable to call on a professional for assistance at this stage.